Monday, November 16th, 2009 at
1:11 pm
Fannie Mae will soon be implementing new mortgage guidelines that will affect an enormous amount of home owners, investors, and soon to be home buyers. These major changes have to do with allowable loan to values on a number of different mortgage types. For those of you who do not know what loan to value (LTV) is, it is the the ratio of the mortgage balance over the home’s value. For example, if you take out an $80,000 mortgage on a $100,000 home, the LTV = 80%
See the pending changes below:
Primary Residence Cash out Refinance
1-2 Units 90%/90% (CURRENT)
85%/85% (NEW CHANGE)
660 score required if LTV >75%
Second Home Cash-out
Refinance
1 Unit 85%/85% (Current)
75%/75%(NEW CHANGE)
Non-owner Purchase 1-2 units
90%/90% (CURRENT)
85%/85% (NEW CHANGE)
Non-owner Rate/term Refinance
1-2 Units 90%/90%(CURRENT)
75%/75% (NEW CHANGE)
Non-owner cash-out Refinance
1-2 Units 85%/85% (CURRENT)
75%/75%(NEW CHANGE)
As you can see, these new changes will greatly affect the allowable loan to values on several different types of mortgage transactions. This can be seen as a positive thing as Fannie Mae and Freddie Mac are in desperate need of stronger investments. Gone are the days of 100% Loan to Value home for Investors and even first time home buyers. 100% Rural programs and VA still have 100% for those that qualify.
Another important note for loan officers:
Fannie Mae’s DU system will no longer be allowing income waivers. This should be implemented sometime in the beginning of November. This is just another change that we all hope will help the mortgage and credit markets get back on their feet.
By: Matt Madlang
Related Posts:
Sunday, November 8th, 2009 at
2:04 am
A bank or a mortgage company, which offers home loans can be referred to as a ‘mortgage lender’. There are various categories of primary mortgage lenders. Here, three major categories are described in detail.
• Mortgage Banker:
A lending organization or an individual that either services mortgage loans or originate loans can be referred to as a ‘mortgage banker’.
The role of a mortgage banker is to sell mortgages to the second mortgage market soon after funding. The mortgage banker can, however, continue to service the loan. In this case, the mortgage sale would not terminate the relationship between the lender and the borrower.
A mortgage banker helps the borrowers to select the type of mortgage that will suit their financial objective.
• Portfolio Lender:
An organization is called a ‘portfolio lender’ when it uses its own funds to provide loans, and maintains a record of the loan in the organization’s books.
It does not sell mortgages to the second mortgage market. Instead, it keeps most of the mortgages for the purpose of an investment portfolio.
Such an organization is not bound by the Freddie Mac or Fannie Mae guidelines.
The portfolio loan can be sold in the second mortgage market only when it is ‘seasoned’. A portfolio loan becomes seasoned when it reaches the one-year mark without any late payments. In such a case, the portfolio lender becomes a mortgage banker who continues to service the loan.
• Direct Lender:
An individual or an organization that gets the funds for the loans from other lending organizations but makes loans in its own name is termed as a ‘direct lender’. He can either be a portfolio lender or a mortgage banker.
Other categories of primary mortgage lenders include a correspondent lender, a mortgage broker, wholesale lender, online mortgage lender, and a sub-prime mortgage lender. These are described in other related articles.
By: Eshwarya Patel
Related Posts:
